Home » Gold » Gold Bullion’s Price Action: Time to Separate the Men from the Boys

https://www.profitconfidential.com/gold/gold-bullions-price-action-time-to-separate-the-men-from-the-boys/
Gold Bullion’s Price Action: Time to Separate the Men from the Boys
Michael Lombardi, MBA
Profit Confidential
2011-09-26T14:12:00Z
2017-06-28 02:59:05 Separating the men from the boys—that’s what corrections in bull markets are all about. And this time, it's the gold market that's testing us all.
Gold
/wp-content/uploads/2011/09/gold2-150x150.jpg

In the depth of a bear market in gold prices, back in 2001, a bull market in gold was born. Gold bullion traded for about $300.00 an ounce in late 2011, early 2002, and yours truly became a staunch advocate of gold at that time.

Since the beginning of the bull market in gold, we’ve seen an often repeated pattern: gold bullion prices advance sharply, profit taking comes in, the “weak hands” (as I call them) dump their gold as the price for bullion falls, prices bottom out, and the bull market continues. This pattern has been repeated for 11 years now.

After reaching an all-time record high of $1,921 an ounce on September 6, 2011, gold bullion prices have fallen back to $1,630 an ounce this morning. Could gold prices fall further? Sure they could. A 20% correction in the price of gold bullion could bring the metal down to $1,536 an ounce.

But is it the end of the bull market in gold bullion? Of course not! But remember, gold is up $333.00 an ounce over the past 12 months—26%—so it has plenty of room to give back some dollars and still be in a bull market.

We’ve been down this route many times before. The human memory is very short-term in nature. In early 2003, the price of gold bullion fell 16%; in the summer of 2006, the price of gold fell 21%; from the spring to the fall of 2008, gold prices fell 28%; in the spring of 2009, gold prices fell 15%—and each time the price of gold bullion recovered and moved higher by the year’s end. In fact, for 11 years running, the price of gold bullion has closed each year higher in price than it started the year.

Separating the men from the boys—that’s what corrections in bull markets are all about: seizing the moment as an opportunity, as opposed to panicking and selling one’s holdings. This time is no different.

Michael’s Personal Notes:

An icon has moved closer to becoming a casualty of the Internet.

In its heyday, Eastman Kodak Co. (NYSE/EK), often referred to as just Kodak, was a company to be reckoned with. Founded by George Eastman in 1892, the company’s name became synonymous with the word “film.”

But, as the years passed, and technology advanced, Kodak’s business suffered. People take pictures with their mobile phones today. Or they take pictures with cameras and download the images onto their personal computers or Facebook page as opposed to printing the pictures.

This year, Kodak is headed for its sixth annual loss in seven years. In 2010, the company lost $678 million. Most disturbing for me, last week the 131-year-old company drew down $160 million from its revolving bank credit line—not a good sign.

Where the Market Stands; Where it’s Headed:

The stock market is severely oversold and due for a bounce. For the four days ended September 22, 2011, the Dow Jones Industrial Average experienced its biggest four-day drop since 2008. About $1.1 trillion in value was wiped from stocks last week.

I believe that a bear market rally in stocks that started in March 2009 continues to preside.

What He Said:

“If I had to pick one stock exchange that would rank as the best performer of 2007, it would be the TSX (Canada’s equivalent of the NYSE). Interest rates in Canad are mainly very low and they are not expected to rise anytime soon. Americans looking to diversify their portfolios, both as a hedge against the U.S. dollar and a play on gold bullion’s price rise, should consider the TSX. Most brokers in the U.S. can buy stock on this exchange.” Michael Lombardi in PROFIT CONFIDENTIAL, February 8, 2007. The TSX was one of the top-performing stock markets in 2007, up just under 20% for the year.

Gold Bullion’s Price Action: Time to Separate the Men from the Boys

By Michael Lombardi, MBA Published : September 26, 2011

In the depth of a bear market in gold prices, back in 2001, a bull market in gold was born. Gold bullion traded for about $300.00 an ounce in late 2011, early 2002, and yours truly became a staunch advocate of gold at that time.

Since the beginning of the bull market in gold, we’ve seen an often repeated pattern: gold bullion prices advance sharply, profit taking comes in, the “weak hands” (as I call them) dump their gold as the price for bullion falls, prices bottom out, and the bull market continues. This pattern has been repeated for 11 years now.

After reaching an all-time record high of $1,921 an ounce on September 6, 2011, gold bullion prices have fallen back to $1,630 an ounce this morning. Could gold prices fall further? Sure they could. A 20% correction in the price of gold bullion could bring the metal down to $1,536 an ounce.

But is it the end of the bull market in gold bullion? Of course not! But remember, gold is up $333.00 an ounce over the past 12 months—26%—so it has plenty of room to give back some dollars and still be in a bull market.

Advertisement

We’ve been down this route many times before. The human memory is very short-term in nature. In early 2003, the price of gold bullion fell 16%; in the summer of 2006, the price of gold fell 21%; from the spring to the fall of 2008, gold prices fell 28%; in the spring of 2009, gold prices fell 15%—and each time the price of gold bullion recovered and moved higher by the year’s end. In fact, for 11 years running, the price of gold bullion has closed each year higher in price than it started the year.

Separating the men from the boys—that’s what corrections in bull markets are all about: seizing the moment as an opportunity, as opposed to panicking and selling one’s holdings. This time is no different.

Michael’s Personal Notes:

An icon has moved closer to becoming a casualty of the Internet.

In its heyday, Eastman Kodak Co. (NYSE/EK), often referred to as just Kodak, was a company to be reckoned with. Founded by George Eastman in 1892, the company’s name became synonymous with the word “film.”

But, as the years passed, and technology advanced, Kodak’s business suffered. People take pictures with their mobile phones today. Or they take pictures with cameras and download the images onto their personal computers or Facebook page as opposed to printing the pictures.

This year, Kodak is headed for its sixth annual loss in seven years. In 2010, the company lost $678 million. Most disturbing for me, last week the 131-year-old company drew down $160 million from its revolving bank credit line—not a good sign.

Where the Market Stands; Where it’s Headed:

The stock market is severely oversold and due for a bounce. For the four days ended September 22, 2011, the Dow Jones Industrial Average experienced its biggest four-day drop since 2008. About $1.1 trillion in value was wiped from stocks last week.

I believe that a bear market rally in stocks that started in March 2009 continues to preside.

What He Said:

“If I had to pick one stock exchange that would rank as the best performer of 2007, it would be the TSX (Canada’s equivalent of the NYSE). Interest rates in Canad are mainly very low and they are not expected to rise anytime soon. Americans looking to diversify their portfolios, both as a hedge against the U.S. dollar and a play on gold bullion’s price rise, should consider the TSX. Most brokers in the U.S. can buy stock on this exchange.” Michael Lombardi in PROFIT CONFIDENTIAL, February 8, 2007. The TSX was one of the top-performing stock markets in 2007, up just under 20% for the year.

Dear Reader: There is no magic formula to getting rich. Success in investment vehicles with the best prospects for price appreciation can only be achieved through proper and rigorous research and analysis. We are 100% independent in that we are not affiliated with any bank or brokerage house. Information contained herein, while believed to be correct, is not guaranteed as accurate. Warning: Investing often involves high risks and you can lose a lot of money. Please do not invest with money you cannot afford to lose. The opinions in this content are just that, opinions of the authors. We are a publishing company and the opinions, comments, stories, reports, advertisements and articles we publish are for informational and educational purposes only; nothing herein should be considered personalized investment advice. Before you make any investment, check with your investment professional (advisor). We urge our readers to review the financial statements and prospectus of any company they are interested in. We are not responsible for any damages or losses arising from the use of any information herein. Past performance is not a guarantee of future results. All registered trademarks are the property of their respective owners.

From: Michael Lombardi, MBASubject: Gold: The Stock Contrarian Investors’ Best Play of the Decade